More than 100 Democratic lawmakers are urging Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the majority leader, to repeal a business tax break as part of the economic aid package that Democrats hope to send to President Biden in the coming weeks.
The lawmakers, led by Representative Lloyd Doggett of Texas and Senator Sheldon Whitehouse of Rhode Island, say the move — and a related change that would effectively raise taxes on some businesses in the years to come — could reduce federal borrowing for the aid package by as much as $250 billion.
Mr. Biden has proposed a $1.9 trillion plan, all financed with borrowed money. Many Republicans have objected to the price tag, saying it is more than what the economy needs and will further bloat the federal deficit.
On Monday, 10 Senate Republicans countered with a $618 billion plan. But those Republican lawmakers will almost certainly reject any increase in business taxes as a means of bridging the two sides’ gap on borrowing for the bill.
The tax cuts in question — which center on so-called net operating losses — were included in a rescue bill Congress passed in March 2020, as the pandemic spread and the nation was in the midst of a recession. They were temporary rollbacks of a limitation placed on business deductions by the 2017 tax law that Republicans passed and former President Donald J. Trump signed. In effect, the March provision allowed some companies that suffered large losses in recent years to reduce their tax bills to the federal government, by applying those losses to offset taxes on profits from the previous five years.
Proponents of those tax breaks — including congressional Republicans and business groups — said the move would provide a cash infusion to companies struggling amid the pandemic.
In their letter to Ms. Pelosi and Mr. Schumer, the Democratic lawmakers say the cuts “benefit a narrow set of high-income taxpayers, including hedge funds, real estate developers, and likely the Trump family.”
“The best place to start for Republicans urging more narrowly-targeted relief is eliminating the $250 billion bonanza for hedge fund managers and real estate speculators they previously tucked into the CARES Act,” Mr. Doggett and Mr. Whitehouse said in a written statement. “With 120 Democratic lawmakers, we urge negotiators to halt the windfall to the least needy and reinvest in the most needy.”
The lawmakers propose repealing the change, which applied to losses incurred from 2018 to 2020, and making permanent the Trump-era limitation on the carrying back of net operating losses.
Together those changes would raise federal revenues by an estimated $250 billion over a decade, the lawmakers said, citing estimates from the congressional Joint Committee on Taxation. Some of that money would come from the government “clawing back” tax refunds sent to companies that have already filed their taxes and made use of the expanded loss provision.
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February 03, 2021 at 12:52AM
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Democrats push to roll back some business tax cuts in stimulus talks. - The New York Times
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